Demand based pricing, Marketing Management

Assignment Help:

Demand Based Pricing: Described methods belong to the category of demand / market based pricing:-

1. What the Traffic can Bear' Pricing

2. Skimming Pricing

3. Penetration Pricing

  • What the Traffic can Bear' Pricing: The seller takes the maximum price that the customers are eager to pay for the product under the given circumstances. This technique is used more by retail traders and than by manufacturing firms. This method brings big profits in the short term objective. But in the long run it is not a safe concept; chances of errors in judgment are very high.
  • Skimming Pricing:This method aims at high profits & high price in the early stage of marketing the product. It gainfully taps the opportunity for selling at high prices to those segments of the market, which do not bother much regarding the price. This particular method is very useful in the pricing of new products, especially those that have a luxury or specialty elements.
  • Penetration Pricing: Penetration pricing seeks to gain greater market penetration throughout relatively low price. This method is also helpful in pricing of new products under definite circumstances. For instance :when the new product is capable of bringing in large volume of sales, but it is not a luxury item and there is no affluent / price insensitive segment, the firm can select the penetration pricing and make large size sales at a reasonable price before competitors enter the market having a similar product. Penetration pricing in such type of cases will help the firm have a good coverage of the market and keep competition out for some time.

The price elasticity of demand is taken into account in all of the demand based pricing methods, indirectly or directly. Price elasticity of demand refers to the relative sensitivity of demand for a product to changes in its value in other words how significantly the sales of the product are affected when price is changed. If decrease or increase in the price of the product results in significant increase or decrease the product is said to be price elastic conversely, if price change does not considerably affect the sales volume, a product is called to be price inelastic.


Related Discussions:- Demand based pricing

Complexnumber, my sir is ask for project in clss 11th for final exam assing...

my sir is ask for project in clss 11th for final exam assingement project

Explain about product line pricing of product development, Explain about th...

Explain about the Product Line Pricing of Product Development. Product Line Pricing strategy of product development bring concerning an inter dependency among products, that is

Explain types of unfair trade practices, Q. Explain types of Unfair Trade P...

Q. Explain types of Unfair Trade Practices? Following trade practices connected to advertising are held as Unfair Trade Practices under MRTP Act. (i) Falsely representing th

Difficulties in evaluation advertising effectiveness, Difficulties in Evalu...

Difficulties in Evaluation advertising effectiveness There are several difficulties and hindrances in the evaluation of advertisement -effectiveness. The major difficulties are

Market analysis, Carrying out a market analysis The marketplace is con...

Carrying out a market analysis The marketplace is continuously changing and a business must be constantly updating to the changes or it will not remain in business for longtim

Explain the different stages of negotiation, ZEZ Company is in the business...

ZEZ Company is in the business of designing and printing bottle labels for soft drinks distributors. The company is, at present, facing very difficult times as recessionary economi

Consumer behaviour, Q. Describe requirement of studying buyer's behavior & ...

Q. Describe requirement of studying buyer's behavior & what  is the influences  of consumer behaviors? Ans.: The study of buyer's behavior is essential to marketing as to w

Product mix, factors influecing product mix

factors influecing product mix

Segmentation, what is segmentation,positioning?

what is segmentation,positioning?

Real option for pharmaceutical company, The management team of a four year ...

The management team of a four year old pharmaceutical company in Boston is developing an immunization against malaria. The team has just learned from the FDC that is has passed sta

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd